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Steer some savings from insurance premiums

Toronto-based author Gordon Stein drew on his personal finance expertise and his drive to help Canadians build wealth — and get out of debt — in writing Cashflow Cookbook.

He describes his book’s 60 financial recipes as “simple, fun and approachable.” They can, he says, add up to $2 million in wealth if applied together over 10 years. His book offers a quick, breezy read and allows you to skip chapters that don’t apply to your life or spending — like kids’ sports fees or snow maintenance.

Do some online comparison shopping and see if it’s possible to get the same coverage with a less-costly premium. (Dreamstime)

With your home inspected and insurance rate established, ask the company about vehicle coverage at a competitive rate. (Dreamstime)

In the second of a monthly series of excerpts, from a chapter titled Car Insurance Clam Bake with Steamed Radiator, Stein explains that most of our monthly fixed bills are not really fixed. Today’s chapter looks at ideas for saving on car insurance — with just an hour or two of work — that can add more than $36,000 to your net worth over 20 years.

JODI WAS PLEASED with the savings she had found by switching her home insurance to a new provider.

She may have been a little too excited by her success. When her car insurance renewal arrived a couple of weeks later, she realized she should have included it as part of her earlier discussion with the home insurance company.

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Her first instinct was to call back her home insurance company and add the car coverage. Instead, she did a little online comparison and got some competitive quotes for both car and home insurance.

With those in hand, she called back their new home insurance company to get their quote on the insurance for her family’s two vehicles. She went through each element of the insurance with the representative to ensure that she had the right type of coverage and that all applicable discounts were in place, given the safe driving record of both her and her husband.

By combining her home and car insurance with the same company, Jodi saved over $70 a month and knew she had a competitive rate.

Jodi used the monthly $70 to increase their RESP contributions for their son, Thomas.

Most of the time, your car insurance just sits there quietly, like the bag of spinach wilting at the back of your fridge.

All that changes if you get into an accident, after which the details of your policy become strangely interesting, like a steaming bowl of Shiitake mushroom risotto.

Book an hour to wade through the insurance company phone system, get to an agent and gently request their help to optimize your costs.

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Ingredients:

Adequate liability is always must, but older cars may be better suited to lower levels of comprehensive and collision insurance.

Compare rates at different deductibles and pick the highest deductible you can afford, should you have a claim.

Shop around for rates and coverage. Try one of the online car insurance quoting tools or at least check with your current provider for the best rates and features.

Bundle home and car insurance for a 10-15 per cent savings; and if you have a vacation property, add that in, too, for bigger savings.

Work with an insurance broker who can shop around for the best rate from several insurance companies.

If you have university-aged kids away at school, call your insurance company and let them know; they will often lower the premium if the little darlings aren’t actually using your car while they are at school.

Pro Chef Tips

Always ensure you have proper coverage in place at all times.

If your car’s roadside assistance is expired, consider joining an automobile association to save on roadside towing and other emergency repairs. It gets you a safe, vetted tow if you need one, and offers discounts on car stuff including insurance. Worth the cost for the safety and peace of mind.

Typical Savings

Two cars, three drivers

Original total monthly premium: $284

Increase deductibles from $500 to $1,000, save $28 monthly

Remove comprehensive on older car, save $19 monthly

Shop coverage like for like, save $23 monthly

New monthly premium: $214 monthly

Total monthly savings: $70

Yield:

10-year value (including inflation): $12,110

20-year value: $36,470

Not bad for a one-hour phone call every couple of years. Get the freed-up cash working for you with debt reduction or increased TFSA, RSP or RESP contributions.

Gordon Stein is a Toronto-based personal finance speaker, author of Cashflow Cookbook and freelance contributor for the Star. Follow him on Twitter: @cashflowcookbk

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